Moving money to another country to reduce EFC

<p>So my parents moved here 20 years ago, and eventually received a substantial 800,000 from my grandfather in a foreign country to buy a house and for their education and savings. Now we have 400,000 in savings, which will hit us hard in our EFC, even though some money needs to be returned. So, would it be legal to move back money originally given to you to another country?</p>

<p>Are they planning to do anything with this 400k in cash, or is it just sitting in an account earning tiny interest?</p>

<p>Here's what I learned from my parents making a lot of interest:</p>

<p>Your school will look very closely if your parents have earned a large amount of interest from banks (at my school it is >$3000 in interest). In my case, they asked to see the Schedule B (reports interest on the tax return) and statements for the accounts on the Schedule B. </p>

<p>If your parents have already earned substantial interest on this $400k, the school will most likely look into it further. However, it's all about how much money you have in a certain account at the time of filing your FAFSA.</p>

<p>In my situation, my parents had money in CD's that earned a high interest rate, which caused the school to look at my FAFSA a couple of times. It turned out not to be a problem, because at the time I applied, the funds had been spent (real estate).</p>

<p>I am not sure how tax codes deal with foreign funds, however if the money is not in your parents' account it will not be a problem.</p>

<p>That being said, if your parents have $400k in cash, can they really not afford to help you out with school?</p>

<p>Open a super secret account in the Caymans, that's where I store all of my blood diamond money.</p>

<p>Yes, it's all about the 1040, yours and theirs. You may also be one of the "lucky" 30% who have to send a copy of the 1040's to the school so they can double check your facts and figures.</p>

<p>^ dude I got no clue what 1040 means.</p>

<p>chasely, at least 200,000 of it needs to be put back to the other country to support them eventually, I'm wondering if it would be fradulent to do so now before applying for financial aid.</p>

<p>ripe..it doesn't matter WHERE your money is located. If you have it, you have to report it on your FAFSA. To not do so is considered fraud. You not only risk losing any aid the school might give you but you also run the risk of having your admission to the college(s) revoked.</p>

<p>You are required to report all money that you have regardless of the location of it.</p>

<p>I don't understand why your parents -- other than their being selfish -- would want to assets so as someone else would pay for your education. Seems they'd be grateful to have so much money given to them that they could send you to college without going into debt or relying on scholarships for you.</p>

<p>OP, it sounds like neither you nor your parents have a very solid grasp of finance, taxation....or ethics! If you try this shifting of such a large amount of funds, it will likely be discovered by the colleges and/or the IRS.</p>

<p>BTW 1040=the basic federal income tax form that everyone fills out.</p>

<p>
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You are required to report all money that you have regardless of the location of it.

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I feel like you simply read the title of this thread, without reading the posts. The money won't be moved, but given back to grandparents. That wouldn't make it our money.</p>

<p>
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OP, it sounds like neither you nor your parents have a very solid grasp of finance, taxation....or ethics!

[/quote]
Don't question my ethics. I had nothing to do with this idea. Also, you don't know our situation. It might be that my grandparents had some sort of disaster, causing them to need around 200k from us, or something along those lines.</p>

<p>"Don't question my ethics. I had nothing to do with this idea. Also, you don't know our situation. It might be that my grandparents had some sort of disaster, causing them to need around 200k from us, or something along those lines."</p>

<p>Did they have a disaster? It's time someone questioned your ethics, you don't seen to be.</p>

<p>Ripe...the most important thing on your financial aid forms is to be honest. If you are not, and there is any reason to question your figures, you will be asked to verify EVERYTHING. Some schools will ask for your family's tax information for the past TWO years. If your family's accrued interest from those bank statements shows that there USED to be signficant money in the accounts, you might be asked to verify where the money went. </p>

<p>Bottom line...be honest. I don't care what you do. You are the one who will have to bear the consequences if there are questions asked and your finances do not align with your verification information. </p>

<p>If your family has $800,000 and they put it in an account that bears 2% interest, they would have $16000 a year just in interest without even touching the principal. That would go a long way towards paying your way at an instate public university.</p>

<p>If your parents need to give money back to your grandparents, it would make sense to do so before you file FA forms. I don't know why this is an ethical dilemma for some people...it's not uncommon for Americans to support their elderly parents and to ask for "special circumstance" consideration or even to include them in their household size if they are providing substantial support. In your family, it sounds as if the money originated with your grandparents and they now need it in their old age. It seems the real question would be whether it will make any difference in terms of institutional grants if your parents have $200K in savings vs. $400K...</p>

<p>^ thanks, if only I could have explained our situation like that.</p>

<p>
[quote]
If your parents need to give money back to your grandparents, it would make sense to do so before you file FA forms.

[/quote]
So it wouldn't be fradulent or illegal in any way?</p>

<p>Afaik, unless you're barred by the US government from transferring funds to whatever country they're in, no! There may be some IRS forms associated with the transfer. Your parents' banker and accountant would be a better source of information on any possible restrictions/tax implications.</p>

<p>
[quote]
it's not uncommon for Americans to support their elderly parents and to ask for "special circumstance" consideration or even to include them in their household size if they are providing substantial support.

[/quote]
</p>

<p>Actually I disagree with this. IF the elderly parents ARE being supported by by the family, they can be listed as dependents, and members of the household. But this will likely be verified by the college.</p>

<p>Also, it is a choice to support your elderly parents or families in other countries and there have been numerous posts here stating so. Colleges could very easily say "this money COULD have been used to support the college costs of this student". I have not heard here or in the area in which I live any time that a family was granted a special circumstances consideration for supporting EXTENDED family (includes grandparents) in any way.</p>

<p>Now...if the grandparents need this money and the family sends it back to them in the old country, so be it. That money would no longer be in the parents' names and that would be that. As others have noted, however, if there is significant interest/dividends noted on the tax return and no assets noted, someone will likely question this FAFSA.</p>

<p>And another thing...to the OP...remember that your family's income also figures into the FAFSA. Unless you are low income without the added money, you may find you don't net any more financial aid anyway.</p>

<p>$200,000 would pay fund $16000 a year each for 4 years for the three kids. If you added the Stafford loan to each of these kids' money, you would have enough to fund a public university for four years for all three of the kiddos. If they started out at a community college and commuted from home for two years, you would have money left in the bank at the end of four years.</p>

<p>If the grandparents need the money, send it back to them. 5.6% of $200,000 is $11,200 which is what you will be assessed (approximately) on the $200,000 you have left....per year.</p>

<p>"I feel like you simply read the title of this thread, without reading the posts. The money won't be moved, but given back to grandparents. That wouldn't make it our money."</p>

<p>Sounds like the idea is to hide the money now by giving it back to grandparents. Your parents probably would inherit the money or get the money after you and your siblings finish college.</p>

<p>If your parents were able to give your parents $800 k for education and a house, they obviously have a lot of money to spare. I really doubt that there's some emergency now in which they suddenly need money from your parents.</p>

<p>I think it's unfair for your parents to expect colleges to give you need-based aid when your family has the resources for you and your sibs to attend college.</p>

<p>Most people in the U.S. have to take out loans -- even borrow against their homes (which weren't bought via monetary gifts from relatives) to pay for their kids' college.</p>

<p>
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we also have three children.

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First, it seems we are writing to the parent, not the child. If so, please be honest and identify yourself accurately.</p>

<p>Next, I wanted to add that shifting money is a huge tax issue that should not be forgotten. Each individual is "allowed" to make a financial gift that is not taxed. It used to be $10K, now I think it's $13K. OP, are your "grandparents" prepared to pay taxes on this change? It's not just a matter of hiding your assets, or looking like you have a small pot. It's dishonest and will get you in trouble. Remember that student who earned $33,000 in FA by dishonestly reporting his scores and achievements (and now has to pay it back)? Do you want that to be you too?</p>

<p>Limabeans...I think these grandparents are from another country and are not subject to U.S. taxes.</p>

<p>^ yeah, it just sounds like your parents are trying to mislead you because they are pretty selfish when it comes to money. they want to force you to apply for scholarships too im guessing, right? And now they are trying to get you to figure out a way to weasel out of a high EFC which they are definetley able to pay. i understand your situation, as in YOU, not your family. The folks are putting pressure on you probably telling you that the most they'll pay is X thousand a year, so that they can have a yatch in retirement. are they jewish, and is this foreign country israel? Did I nail your life story? YUPPPPPP</p>

<p>Ripe, on other threads you indicate an interest in applying to the likes of Princeton, Harvard, MIT, Columbia, Cornell...schools that give ONLY need based financial aid. This thread indicates that with your parents' current assets, you will not qualify for significant need based aid based on an estimated EFC.</p>

<p>How much will your parents contribute to your college education? My impression from this thread and comments made on other threads (e.g. trying to convince your parents that applying to Columbia is worth it in your financial situation) is that your parents are not willing to pay as much as these schools cost. Are they perhaps also encouraging you to look at other, more affordable schools?</p>

<p>Regardless...you should cast a wider net than just schools that will guarantee to meet your full need...whatever that turns out to be. If you have the stats to get accepted to the Ivies and the like, you might also have the stats to garner significant merit aid elsewhere...if that happened, it wouldn't matter how much money you had in the bank.</p>